Factory output in U.S. rose more than forecast in October

Factory production in the U.S. rose more than forecast in October, indicating the partial government shutdown did little to halt the pickup in manufacturing at the start of the fourth quarter.

The 0.3% advance at factories followed a 0.1% gain the prior month and exceeded the 0.2% median projection in a Bloomberg survey, figures from the Federal Reserve showed today in Washington. Total industrial production fell 0.1% as output at mines and utilities declined.

The report indicates businesses were increasing orders and output even in the face of the 16-day federal government closing in October. The housing rebound and demand for vehicles, the mainstays of manufacturing, will help to sustain economic growth that’s forecast to cool in the wake of last month’s fiscal gridlock.

“We’ve seen decent growth in manufacturing,” said Brian Jones, senior U.S. economist at Societe Generale in New York, who correctly projected the drop in total production. “Demand is holding up. The economy in general is doing better.”

The median forecast in a Bloomberg survey of economists called for a 0.2% rise in total industrial production. September output was revised up to a 0.7% gain from a previously reported 0.6% advance. Estimates of the 84 economists surveyed by Bloomberg ranged from a drop of 0.2% to an increase of 0.5%.

Another report today showed a gauge of manufacturing the New York region unexpectedly declined this month. The Federal Reserve Bank of New York’s general economic index fell to minus 2.2 in November from 1.5 the prior month. Readings less than zero signal contraction in New York, New Jersey and southern Connecticut.

The gain in manufacturing, which accounts for about 75% of total industrial production and 12% of the economy, reflected increased output of furniture, metals and computers and electronics.

Today’s Fed report also showed that capacity utilization, which measures the amount of a plant that is in use, fell to 78.1% from 78.3% the prior month.